Audit: State mismanaged money for child program

Report critical of millions in overhead spending through contract with SDSU foundation

The San Diego State University Research Foundation is at the center of a scathing audit that has revealed serious missteps in how state health officials handled funding for a program aimed at preventing accidental childhood deaths or injuries.

The problems kept millions of dollars from going to community-based programs, such as fire escape route planning, child safety-seat education, raising awareness of common household poisons, helping provide tips for migrants, running hot lines and even bike to school days, according to the report.

State Auditor Elaine Howle on Tuesday reported that over the past eight years, the state Department of Public Health has wrongfully paid more than $2 million to the San Diego State University Research Foundation to administer the program rather than having state employees do the oversight as required by law.

Howle found no wrongdoing by the university foundation.

The foundation was “unaware” that state public health officials “were not following their internal requirements,” spokeswoman Debbie Brighton said in an email.

The university foundation received the money to administer the “Kid’ Plates Program,” which raises funds through the sale of specialized license plates. The plates are known as “Have a heart, be a star, help our kids.” A share of license plate sales are to go to grants to community-based organizations that offer various childhood safety programs.

In her audit, Howle said:

“In violation of state law, (health officials) spent roughly 40 percent of the total appropriations they received over a four-year period, or nearly $2.1 million, on the research foundation’s administrative costs even though the Legislature intended the funds to pay only for costs directly associated with preventing unintentional childhood injury.”

State health officials only exacerbated the problem by continuing to have the research foundation oversee the grants even after being warned two years ago that it may not be legal, she indicated.

“Ultimately, (the health department) determined that it could not justify continuing to contract with the research foundation. While it was attempting to resolve this issue, however, (they) further violated state law by allowing the research foundation to perform services for 10 months without a contract,” according to the audit.

“Because the research foundation could not award grants without a contract, the Stateca did not receive any benefits from the 10 months of work the research foundation performed and for which the Stateca ultimately paid,” the auditor concluded.

In her email, Brighton said the foundation was led to believe its contract would be extended.

The state, she wrote, “kept us informed as they worked through the process of obtaining final approvals with the expectation that the contract would be fully executed and encouraged us to continue work on the project. We provided full service to the state for the work we were contracted to do …”

It was not until 10 months later, and after ringing up $322,000 in bills, that the state told the research foundation that it could not pay for the work, according to the audit.

The university foundation responded by filing a claim seeking to be reimbursed for its expenses, which the state authorized in June 2012.

“We demonstrated that we operated in good faith and under the terms of the anticipated contract,” Brighton said in her email. Howle agreed.

Still, “the Statecq ended up paying more than $300,000 in administrative costs without awarding any funds that might have helped to prevent unintentional childhood injuries,” Howle said.

Brighton also said that the “the unfortunate result was that long-term employees had to be terminated and important safety programs may not have received the funds they deserved.”

The net result, Howle said, is spending on the program slowed significantly.

The state “did not spend roughly $1 million of the $1.4 million the Legislature appropriated in fiscal year 2010–11 for the Kids’ Plates Program,” Howle said. “Moreover, (health officials) did not award any grants during this fiscal year for the program’s intended purpose—to prevent child injury.”

The Department of Public Health, in its response included in the audit report, did not dispute most findings and pledged to take corrective actions to ensure that contracting law is followed.

It did suggest that if any overpayments were made to the research foundation that the state would pursue reimbursements.

It will also enact programs to ensure there are contracting performance measurements in the Kids’ Plate program, including requiring contractors to submit regular performance reports.

The department will also take steps to assess data that would provide insight into how well county programs are working to reduce childhood deaths and injuries.